Archive for Business

Washington businesses could receive fewer threats of patent infringement with the passage of a bill that discourages so-called patent trolls.

Patent trolls are companies that use infringement claims to force small businesses to pay licensing fees or face expensive lawsuits.

Senate Bill 5059, the so-called Patent Troll Prevent Act, would amend the state’s Consumer Protection Act to include bad faith assertions of patent infringement and allow the state Attorney General to bring action against a company that violates those rules.

Rep. Laurie Jinkins, Tacoma Democrat and prime sponsor of the House version, says it will protect small businesses in the state. “This bill will allow Attorney General’s office to pursue bad actors who write a letter in bad faith to a small business or someone else, trying to get them to just give up money, even though they have no hold on the patent,” she said.

The state Attorney General’s office is already investigating companies who send suspicious letters claiming patent infringement. One company sent 900 letters to more than 300 Washington businesses, a spokesperson said.

The bill passed 94-3 on the state House floor on Monday. It previously passed the Senate, and now moves to Gov. Jay Inslee’s desk for his signature.

Similar laws have passed in 17 other states. A federal bill to discourage patent trolls passed with overwhelming support in the House, but stalled in the Senate. Supporters say heaving lobbying from biotechnology and other companies prevented the federal measure from moving forward.

However, a variety of representatives of groups providing services to low-income earners have argued in committees against the bill this session, saying that the fees on the six-month loans threaten to keep people in debt.

Seattle resident Afam Ayika testified against the bill and told the committee that many people like him who earn low wages can get into a “debt trap” because of the low fees.

“I have been in the payday loan cycle for years for a time. It’s emotionally debilitating, you work hard for your money,” he said. “You could have used that to buy your kids shoes. You could have used to feed your children.” (more…)

Washington startups say they’re facing an onslaught of letters threatening lawsuits from so-called “patent trolls,” who claim everything from storing files online to using a smartphone application is patent infringement.

The state Senate on Tuesday passed a bill with a vote of 41-6 to discourage patent trolls from sending threatening letters to small businesses, forcing them to pay licensing fees or face an expensive lawsuit.

Senate Bill 5059, called the Patent Troll Prevention Act, amends the state’s Consumer Protection Act to include bad faith assertions of patent infringement and would allow the Office of the Attorney General to bring action against a company which violates the rule.

State Attorney General Bob Ferguson requested the bill, sponsored by Sen. Joe Fain, R-Auburn, and Sen. David Frockt, D-Seattle. Ferguson’s office recently investigated one company that sent 900 letters to more than 300 Washington businesses. The business used shell companies and was not incorporated within the state, a spokesperson said.

Bad faith assertions outlawed in the bill include demands without specific information about the patent, such as its registered number, the name and address of the patent owner or facts relating to how the patent was obtained.

Patents were created to protect and incentivize innovation, but now some say the process is backfiring and it’s becoming easier to file patents for broad ideas. The U.S. Patent Office issued a record number of patents in 2013 – nearly three times as many as it issued 20 years ago. (Story continues below)

“It’s a distraction for a lot of companies,” she said. “You might get a letter that looks very official, but it’s not always the case. Startups will have to decide whether to pay to go to court or pay licensing fees for patents that can be so broad, even as far as patenting any retailer that has a mobile app.”

It’s not just technology. Homebuilders last month told lawmakers they are being flooded with letters claiming the use of fans to dry out a home was patent infringement. A Santa Clara University study in 2012 found that 55 percent of patent trolls target small business and 18 percent of business give in to demands without fighting the infringement assertion in court.

But Marshall Phelps, former head of intellectual property for Microsoft and IBM, says Washington should wait for the federal system to work itself out. Patent litigation was down 40 percent last year and the U.S. Patent Office is getting tougher, he said.

“Maybe for a while there, the U.S. Patent Office was too generous, but I don’t think that’s a point you can still make,” he said. “Washington lawmakers might just be trying to help out the mom and pop store, but they could make it worse. I would hate to see the federal system lose public approval.”

The U.S. Supreme Court has heard a record number of patent cases in the past two years. Recent rulings have made it easier for small businesses to have lawyers’ fees reimbursed when they win a case against patent trolls.

Similar laws have passed in 17 other states. A federal bill to discourage patent trolls passed with overwhelming support in the House, but stalled in the Senate. Supporters say heaving lobbying from biotechnology and other companies prevented the bill from moving forward.

One of the world’s largest patent portfolios is in Washington state. Intellectual Ventures, a Bellevue-based company with more than 40,000 patents, has spent more than $700 million buying patents from inventors and has more than 500 employees to manage and create new patents.

The firm said the federal measure was too broad and set up a political action committee to lobby against it. Intellectual Ventures contributed $83,450 to federal candidates as of Election Day 2014, according to OpenSecrets.org. A spokesperson said the company supports Washington’s proposal to stop abusive letters and similar efforts in other states.

Washington’s effort now moves over to the House, where it will have until April 1 to make it out of a chamber committee. Companion House Bill 1092, sponsored by Rep. Laurie Jinkins, D-Tacoma, passed out committee on Jan. 29.

Tiffany Turner owns Adrift Hotel in Long Beach and is in support of the bill. She said paying employees a higher wage is the right thing to do. Turner said that she pays above minimum wage, and has seen improved retention, which helps her business.

“We live in a state and an economy where people can’t make ends meet,” at minimum wage, she said. “As business owners this is responsible and it is not difficult for businesses to implement,” she said.

But Bob Mandel, who owns a Dairy Queen franchise in University Place, said he took home $45,000 a year from his franchise last year and can’t afford to give his employee a raise.

“Fast food restaurants are not a final destination, we’re are a starting point for most,” he said.

The current state minimum wage is $9.47 an hour — the highest state minimum wage in the nation. That’s not counting the city-wide minimum wage increases in Seattle and Seatac, places where the minimum was set at $15 an hour.

The minimum wage bill would implement a $10 minimum wage in 2016, and then raise it to $10.50 in 2017, $11 in 2018, reaching $12 an hour in 2019.

Nathan Ward, who makes $9.50 an hour working at Taco Bell, was among the workers who testified in favor of the bill. Ward said that with his current rate of pay, he’ll be paying for medical bills for years.

“It is as such right now I can’t afford to miss one shift,” he said. “It is either miss a shift or take a $70 hit in my paycheck that I can’t afford. I wouldn’t be able afford to pay cell phone bill or pay my rent, or I’d get kicked out on the street.”

He also said if he made more, he could afford to spend the money at other businesses in Aberdeen.

But JoReen Brinkman, who owns restaurant franchises in Pullman, said that she would have to raise prices in order to accommodate the change.

“Last year we were forced to raise our prices 2 percent due to an increase in minimum wage and a rising costs of goods. We had a huge backlash from customers,” she said.

To accommodate for a $12 minimum wage, “I would have to increase prices 7.8 percent,” she said.

People also testified on a sick leave bill that would allow employees to earn paid leave to take care of illnesses or domestic violence issues. Employers would be required to offer between five to nine days of leave depending on the size of the company.

The bills are scheduled for a committee vote on Thursday. You can watch the entire hearing in TVW’s archives.

Washington could become one of eight states to limit the undercover investigations of animal rights groups on farms.

A cow reacts to abuse at an Idaho farm in a screenshot of the undercover video.

House Bill 1104 would make it a crime to record agricultural operations without permission. Anyone found guilty of intending to cause economic injury to a farm, under the bill, would be charged with a gross misdemeanor and face a maximum sentence of one year in jail and a $5,000 fine.

The bill, called “ag-gag” by opponents, is modeled after a law passed in Idaho last year. Following a Los Angeles-based animal rights group release of a video showing abuse at a dairy farm, the state passed the law to curtail similar undercover investigations. One dairy worker was sentenced to 180 days in jail for beating cows inside a milking barn. The farm fired at least five additional workers.

Prime sponsor Rep. Joe Schmick says the bill would protect farmers, ranchers and growers from unfair sabotage. “Every farmer, and I’m speaking as a farmer, is scared of misrepresentation when we’re going everything right,” the Colfax Republican told the House Public Safety committee Tuesday.

Opponents, which include animal rights groups, labor organizations and the American Civil Liberties Union, say the bill is unconstitutional and violates First Amendment rights. “This is pretty clearly an attempt to protect certain kinds of businesses from certain kinds of unflattering publicity,” Washington’s ACLU spokesperson Chris Kasaas said. “We already have laws that outlaw trespass and industrial sabotage. This bill is targeting speech, and a very specific kind of speech.”

Schmick says the bill doesn’t keep people from reporting crimes. Illegal behavior should be reported, he says, and farm owners would have to prove someone entered an agricultural business with intent to cause economic harm.

At least seven states have so-called “ag-gag” laws making it a crime to secretly film farm operations without the owner’s consent. Kansas, Montana and North Dakota were the first in the 1990s. Since then, Idaho, Iowa, Missouri and Utah have followed.

Dan Paul, Washington director of the Humane Society of the United States, told TVW this bill would outlaw important investigations for improving agricultural conditions — for our health and animals’. A farm in California, he says, was sending cows too sick to stand up to the slaughter lines. “That meat was going to school lunch programs in the state of California,” he said. “Without that undercover investigation, we would never have discovered.”

Demonstrating against farms or recording labor negotiations she says would fall under the language of the bill, which would make it a crime to intentionally cause economic injury.

Farmers, ranchers and growers protected under the bill were not at the hearing to testify. Schmick told the committee it’s because agricultural business owners were scared to weigh-in on the controversial bill for fear of retaliation from animal rights and other groups.

Snowshoes are a perishable item when it comes to sales, David Burroughs of Cascade Designs in Seattle told a joint Senate committee — and congestion linked to a labor dispute at West Coast ports is hurting the 40-year-old outdoor gear company.

“We lost orders to our mainly Chinese-manufactured competitors,” he said. “We have lost sales to date of $1.2 million.”

Because of the backlog of work at container ports, including the ports of Seattle and Tacoma, Cascade Designs had issues with getting parts from its plant in Cork, Ireland to its plant in Seattle. The congestion also hurt the company’s ability to send its products to its overseas customers, Burroughs said.

“This type of thing creates reputational damage,” he said. “Our customers count on our products being there on time.”

Aerial photo of Port of Tacoma taken in 2012 by Aequalis Photography for the Washington State Department of Transportation

The congestion at 29 west coast ports, including ports in California and Oregon as well as Seattle and Tacoma, has been hurting businesses from all over Washington that rely on international trade, senators at a joint meeting of the Commerce and Labor and the Trade and Economic Development committees heard Wednesday morning.

The backup is occurring in the midst of protracted contract negotiations between the Pacific Maritime Association (PMA), which represents the companies that manage work at the ports, and the International Longshore and Warehouse Union (ILWU), which represents the workers. The contract expired in June and the two sides are negotiating in San Francisco.

Dan McKisson, president of the Puget Sound District Council of the International Longshore and Warehouse Union, said that the Pacific Maritime Association cut the night shift, making it difficult for workers to clear cargo from the port and causing an increase in accidents.

“It’s a mess right now,” McKisson said. “When we were working full shifts, we could clear it.”

McKisson also said that having one shift during the day — when street traffic is at its worst — doesn’t help.

The association declined an invitation to appear at Wednesday morning’s hearing, according to Senate Commerce and Labor Committee chairman Michael Baumgartner (R-Spokane).

Eric Schinfeld of the Washington Council on International Trade told the committees the contract dispute is the direct cause of the slowdown, which costs businesses that rely on trade to lose millions of dollars the short and long term.

“Because of that contract negotiation we are seeing slowdowns. Because of that in the last few months and into this year. We are seeing hundreds of millions of dollars of lost economic activity in our state,” he said. “Frankly, those are international customers who are saying, ‘If you’re not going to sell us your goods in Washington state, we are going to find people from other countries around the world to give us their goods instead.’ ”

Business interests who testified on Wednesday said the backup at the port is causing a ripple effect, with layoffs occurring on the growing, processing and shipping end.

Marc Spears, export sales manager of Chelan Fresh Marketing, which represents 400 growers, said that their exports through the ports were being cut in half.

Spears said that apple and pear growers are missing a big part of the Chinese New Year market in Asia, where the state’s apples have been a big draw in the months of December, January and February.

“Basically, these first three months, that’s demand that’s pulling us through these trying times,” he said. “Everyone has been counting on these times.”

It wasn’t quite a debate, but the differences were clear in presentations on state legislative priorities given by Sen. Andy Hill (R-Redmond) and Rep. Reuven Carlyle (D-Seattle) at the Washington Policy Center’s Solutions Summit in Bellevue on Wednesday.

“We do not have a brutal deficit,” Hill said. “It’s a false choice to say you raise taxes or you make cuts.”

Carlyle, the House Finance chairman, was critical of Washington’s taxing system as a whole, which he says squeezes middle- and lower-income taxpayers as well as small businesses. But Carlyle was also skeptical of the idea that the spending side of a budget should get the most scrutiny. He said many of the state’s tax exemptions to businesses have not been revisited since they were passed.

“I believe the best tax structure would be low rates, broadly applied with few exemptions,” he said.

The Washington Policy Center, a pro-business think tank, hosted Hill, Carlyle and Sen. Curtis King (R-Yakima) and others in a half-day summit that prepared attendees and other supporters for the 2015 Washington state legislative session. The Bellevue event, which drew 400 people, was the second day of a two-day summit on legislative issues. The first day was held in Kennewick on Tuesday.

Other speakers at the Bellevue event included former Attorney General Rob McKenna, former New York Gov. George Pataki, Forbes columnist and former health care policy advisor to Mitt Romney Avik Roy and a small business panel that included former Starbucks president Howard Behar and restaurateur Taylor Hoang, who owns Pho Cyclo restaurants.

Sen. Curtis King (R-Yakima) speaks at the Washington Policy Center's Solutions Summit in Bellevue on Wednesday.

In a transportation forum, King, the Senate transportation chairman, declined to discuss in detail why lawmakers failed to come up with a transportation package that would pay for major road projects in the last session, but said that going forward, the state needs to consider what projects would make the greatest economic impact to the state as a whole.

“We got to take this limited amount of money and use it to address our problems,” he said. “Bike and ped paths are not our problem… They are nice to have, but not our problem.”

King, who was in the panel with Marc Scribner, a research fellow at the Competitive Enterprise Institute, also criticized cities that make local decisions without considering how transportation will be affected, such as in Seattle, where several projects in the South Lake Union area will bring 44,000 people to the area to live and work and bringing further congestion to the area, he said.

“Because Seattle said, ‘Hey, we’ll let you build those towers,’ is that the state’s problem?” King asked.

On this special one-hour edition of “Legislative Year in Review,” we recap the highlights from the 2014 session — from opening day to Sine Die. The show includes debate over issues such as the Dream Act, minimum wage, gun control, abortion insurance bill, death penalty, mental health, teacher evaluations, taxing e-cigarettes and the supplemental budget. Plus, a quick wrap-up of several of the bills that passed this year. Watch the show below:

When Sean Green of Spokane became Washington’s first licensee to produce and process recreational marijuana, he likened it to the end of an era.

“Cannabis prohibition is over,” he said.

Green’s license were issued at a Washington State Liquor Control Board meeting on Wednesday to a flurry of publicity.

“We are living the dream today here right now,” he said.

Green will operate a 21,000-square-foot growing operation in Spokane under the business name Kouchlock Productions. (Couch lock is slang for too stoned to move.) He said he’s invested $6 million in the growing and processing operation.

Sean Green of Spokane displays the first recreational marijuana producer and processor license issued in the state.

Green has operated a medical cannabis dispensary since it was legalized in Washington in 2011, and has dispensaries in Shoreline and Spokane.

Green said there still were obstacles for entrepreneurs, citing the ongoing difficulty in finding a bank willing to work with marijuana businesses.

While Green was the first licensee, the Washington State Liquor Control Board is going through 2,800 applications for producing and processing, said Becky Smith, Liquor Control Board Marijuana Manager.

Several more producer and processor licenses are in the final stages and will be issued this week, according to the Washington State Liquor Control Board.

Sean Green of Spokane hugs a staff member of the Washington State Liquor Control Board as he receives the first recreational marijuana producer and processor license in the state.

Retail licenses will be issued after a lottery later this spring, and the state is still set for the first pot stores to open this summer, according to Liquor Control Board agency director Rick Garza.

Board member Chris Marr said he expects the retail stores to roll out, rather than all be ready to open on the first day. The state will issue 338 retail licenses.

On Tuesday’s edition of “Legislative Review,” we cover a proposal by Senate Democrats to close tax breaks to raise money for education. We also have details on a bill to allow some prison inmates to take state-funded college courses, and another measure that would let Washington entrepreneurs raise money through crowdsourcing.

About Capitol Record

The Capitol Record is TVW's blog about state government. TVW is a non-profit network modeled after C-SPAN, airing gavel-to-gavel coverage of the state Legislature as well as independently produced shows. For comments or questions, e-mail Christina Salerno.